The mystery behind the emergency trading suspension of Annada (002136.SZ) and Liuguo Chemical Group (600470.SH) on November 6th has been revealed.
On the evening of November 7th, according to the disclosure by Wanhua Chemical (600309.SH), Wanhua Chemical, along with Tongling State-owned Capital Operation Holdings Group Co., Ltd. (referred to as “Tongling State-owned Control”), Anhui Chuangxin New Materials Co., Ltd. (referred to as “Chuangxin New Materials”), Anhui Heyuan Equity Investment Co., Ltd. (referred to as “Heyuan Investment”), Anhui Provincial Investment Group Holding Co., Ltd. (referred to as “Anhui Provincial Investment”), and the target company Tongling Chemical Industry Group Co., Ltd. (referred to as “Tongling Chemical Group”), signed the “Equity Change Framework Agreement.” Through equity transfer, capital increase, and other means, Wanhua Chemical and its affiliates will hold a 51% stake in the chemical business of Tongling Chemical Group, as well as a 34% stake in the non-chemical business (with veto power over major matters). If the transaction is successfully completed, Wanhua Chemical will become the controlling shareholder of the chemical business of Tongling Chemical Group, and the actual controllers of the chemical business and subsidiary companies, including Liuguo Chemical Group and Annada, will change to the State-owned Assets Supervision and Administration Commission of Yantai Municipal People’s Government.
Wanhua Chemical further stated that the company has followed internal decision-making procedures, and according to the company’s articles of association and relevant laws and regulations, the signing of this framework agreement does not require board of directors and shareholder meeting deliberations. The signing of the “Equity Change Framework Agreement” is not considered a related-party transaction and is not expected to constitute a major asset restructuring as defined by the “Measures for the Administration of Major Asset Restructuring of Listed Companies.”
Tongling State-owned Control mentioned above is 100% owned by Anhui Tongdu Investment Group Co., Ltd., with the actual controller being the State-owned Assets Supervision and Administration Commission of Tongling Municipal People’s Government. Tongling State-owned Control holds a 37.26% stake in the target company Tongling Chemical Group. Chuangxin New Materials has shareholders: Tongling Zhongan New Materials Industry Investment Fund (Limited Partnership) holding 86.83% and Anhui Chujiang Hengchuang Enterprise Management Consulting Co., Ltd. holding 13.17%, with no actual controller. Chuangxin New Materials holds a 32.34% stake in the target company Tongling Chemical Group. Heyuan Investment holds a 23.07% stake in Tongling Chemical Group. Anhui Provincial Investment holds the remaining 7.33% stake in Tongling Chemical Group. Chuangxin New Materials and Heyuan Investment are acting in concert.
According to the introduction, Tongling Chemical Group completed its state-owned enterprise (SOE) mixed ownership reform in 2019 and has since become a diversified conglomerate with leading industries in chemical ore mining and selection, sulfur and phosphorus chemical industry, fine chemicals, new materials, trade logistics, and real estate development. It is an important domestic base for sulfur and phosphorus chemical industry and new pigment industry. It controls two listed companies, Liuguo Chemical Group and Annada. Its main products, including high-efficiency phosphate compound fertilizers, titanium dioxide, phthalic anhydride, pyrite, and battery material iron phosphate, have achieved significant sales volumes and are among the top in the domestic industry. In the first three quarters of 2023, Tongling Chemical Group recorded operating income of 14.21 billion yuan and a net profit of 259 million yuan.
All parties have unanimously agreed that the valuation reference date for this transaction is October 31, 2023. The transaction ceiling for the equity value of the post-separation Tongling Chemical Group (chemical business) and the post-separation non-chemical companies (i.e., the pre-separation equity value of Tongling Chemical Group) shall not exceed 6 billion yuan, based on the assessed value.
Wanhua Chemical stated that its participation in the restructuring of Tongling Chemical Group will further enhance its upstream raw material supply chain and strengthen the core competitiveness of its battery business. Moreover, Tongling Chemical Group’s titanium dioxide business ranks among the top ten in the industry, and this business has complementary and synergistic effects with Wanhua Chemical’s existing coatings business. Through this restructuring, Wanhua Chemical will hold a 34% stake in the mining business of Tongling Chemical Group, which will further secure phosphate ore resources, address bottlenecks in Wanhua Chemical’s future phosphate resource demand, and enhance product competitiveness. Additionally, leveraging its mature coal chemical operation experience and technological advantages, Wanhua Chemical will optimize Tongling Chemical Group’s coal gasification facilities to further enhance its existing product market competitiveness.
As for Annada and Liuguo Chemical Group, they are scheduled to resume trading on November 8th. However, it should be noted that the aforementioned agreements are currently at the stage of principle and framework agreements, and there is still uncertainty. All parties have unanimously agreed to strive for the completion of the delivery or transfer of relevant equity by December 31, 2023.
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Titanium Dioxide
Panzhihua Haifengxin has developed a range of tio2 pigment which is client-oriented and aims to address customer needs in the fields of coating, ink, plastic, paper, and so on.
